Former immigration minister and National Party Dunedin list MP Michael Woodhouse has criticised the Ministry of Education for using appropriated funds for purposes they were not intended.
The ministry has denied the allegations.
Mr Woodhouse said the former government intentionally made Esol funding for refugee pupils, higher than for migrant pupils and New Zealand-born children of migrants, because refugee children came with little-to-no English language skills and they were suffering from the traumas of their former war-torn home.
But in December last year, the Ministry of Education told schools Esol funding would be averaged out and everyone would receive the same amount.
The ministry said the old system was ''complex'' and the new system was designed to make it simpler for schools to budget and plan for all pupils needing Esol support.
Mr Woodhouse said the money was specifically earmarked for refugees and, therefore, it should not be treated the same as other Esol money.
''But then they [the ministry] decided it was all a bit hard and they chucked it all into a big bucket and divided it by the number of schools or kids that needed it.
''It's really a big slush fund that anyone can get access to.
''As far as I'm concerned, that's lazy, it's inconsistent with what Cabinet expected would happen to that money, and it's letting those children down.
''It should be reversed. Schools like Carisbrook School [in Dunedin] should have the money they were expecting, returned to them.''
The issue was highlighted in December last year when Carisbrook School discovered it would get $18,750 less funding under the new system, to provide language education to its 34 Middle Eastern refugee pupils.
Principal Ben Sincock said the ''last-minute cut'' to Esol funding left him and many other school principals angry and scrambling to find ways to fund teachers they had already employed for this year.
He, too, believed the ministry should reverse the change.
He said it was affecting a lot of schools around Otago, and more and more refugee and migrant pupils were arriving in Dunedin every six weeks.
Ministry of Education sector enablement and support deputy secretary Katrina Casey said the funds appropriated for new refugees were still being used specifically for refugees.
''With the streamlining of Esol funding from this year, we are able to target the funding more appropriately.
''Schools can apply for additional support for students from a refugee background through the Refugee Flexible Funding Pool, which means that more funding is available for those who need it.''
From March 2019, she said the nine existing funding rates would be reduced to two - a rate for primary/intermediate pupils and another for secondary pupils.
''All eligible primary and intermediate students, regardless of status, will receive a base rate of $700 a year, and all eligible secondary students will receive a base rate of $900 per year.
''The funding schools received for refugee students was transferred into the refugee flexible funding pool, so that the value of support for refugee students is maintained and can be targeted to those students who need additional support.
''An additional $190 per year for primary and intermediate refugee students, and $380 per year for secondary refugee students can be applied for via the refugee flexible funding pool.
''This funding appropriated for refugee funding is therefore specifically set aside for students from refugee backgrounds, and only they have access to it.''
Since the announcement about funding changes, the ministry had contacted every school with refugee pupils, including Carisbrook School, to help them apply for the additional funding.
